Keeping a Lid on Health Insurance Costs

Health-care and insurance costs continue to creep higher. For agriculture, those rising costs have added pressure to already tight profit margins. But, whether you’re an employer or an employee, there are some ways to temper the impact.

Here are some suggestions from financial planners to minimize the premium increases and your overall health-insurance costs.

Study plan choices. Insurers offer more than one health-care plan, such as HMOs, PPOs, POS plans and regular indemnity. Compare the benefits, costs and restrictions of the various plans. If it’s a personal plan, select the one that best fits your health history and that of your family. If it’s a plan that you’re providing for employees, consider what best fits their needs — but be sure to provide some options.

Don’t automatically pick the least expensive plan. A plan with excellent prescription benefits, while more expensive up front could prove less so in the long run if you eventually require high-priced prescriptions.

An indemnity plan, where you have the freedom to use a health-care provider that you choose, but at a higher out-of-pocket cost than an HMO or PPO, can actually be cheaper if you rarely need care.

Carefully review the plan that you had last year; it’s benefits and cost may have changed dramatically.

Shop around if you’re on your own. Look for group policies through associations.

Some HMOs let individuals in at group rates. Consider a medical savings account that lets you buy a high-deductible insurance policy and set aside money in a tax-free savings account to pay the deductible or other out-of-pocket medical costs.

Choose a high deductible. It might knock 20 percent, perhaps more, off your premium cost. This works especially if you tend to be healthy. Stash money away every month in a money market emergency fund to use for deductibles and co-pays. If you don’t use the money, at least you’ll earn some interest on it.

Chip in. Five years ago, the federal government began funding the Children’s Health Insurance Program through states. This program is designed to provide health insurance for children whose parents make too much money to qualify for Medicaid, but can’t afford private coverage. For more information, call (877) 543-7669.

Use a flexible spending account. This is a great deal that many people overlook. You estimate how much out-of-pocket medical costs you will likely spend during the next benefit year. Say it’s $2,400 based on previous experience, or known future expenses.

Your employer can take $200 out of your paycheck each month to put into your account. (If you’re the employer, you do this for yourself.)

The benefit here is that the government doesn’t tax that $200, even when you eventually spend it on medical care such as co-pays and deductibles.

In short, the government subsidizes your costs to the extent of your income-tax bracket. Of that $2,400 you use from the account, the government effectively pays $672 of it if you’re in the 28 percent tax bracket.

If you’re an employee be conservative about how much you set aside. Anything that you don’t spend within the benefits’ year, the employer keeps.

Compare dual coverage. Generally, you will want to be insured under one insurance plan; it rarely pays to have dual coverage.

This works particularly well if one employer’s options offers a “cafeteria” plan. That individual can opt out of the health-care portion and use the allotted benefit money in other ways. However, if job stability is a concern, you may want to be covered under both employers’ insurance plans.